Thursday, June 26, 2003

:: EU subsidy reform fudged ::

Perhaps the most important reforms are the removal of the link from subsidies to production (in many cases) and increases in the funds available for environmentally beneficial measures.

However, countries still have the freedom to carry on subsiding farming if there is a danger of land coming out of production (which is obviously quite a major concession!) and the overall budget of 43 billion euros will remain much the same.

Key points:

* Abolish most of the subsidies that reward farmers according to how much food they grow

* Farmers will receive a single payment, rather than grading the amount of money in line with the amount of food produced

* Individual countries will be able to stick to the old system if there is a risk that the new system would lead to the land being abandoned

* The prices at which the EU intervenes to support farmers are to be cut in key sectors, including milk powder and butter

* Countries like the UK, which want to press ahead with more radical reform, are allowed to do so

* Direct payment for bigger farms will be cut to finance the new rural development policy, promoting the environment and animal welfare.

Agriculture subsidy expert Wyn Grant says these reforms will require further analysis, but as an initial assessment that:

* This 'multi-speed' process could well complicate WTO negotiations

* (The) 3% cuts in subsidies in 2005, 4% in 2006 and 5% from 2007 onwards to create extra revenue for rural development measures...

... there will be a financial discipline mechanism. This will, however, involve annual decisions by the Council which will leave plenty of room for the usual political games.

Earth-Info.Net particularly notes Wyn's final thoughts...

The old adage that half a loaf is better than none comes to mind. But perhaps it is more like a quarter of a loaf. And like all fudged reforms of the CAP, it will reduce pressure for real reform. Franz Fischler has hailed the agreement as 'the beginnng of a new era' but how far will it meet his aims of simplification, avoiding unwanted production incentives, improving market oriented production and avoiding trade distortions? Much will now depend on what happens in the Doha Round...